News

African governments learn from the rights and wrongs of Australian mining

By Richard North

7 March 2013

Australia's complex relationship with the mining industry is being used as a case study for African governments grappling with a wide range of issues including regulation, revenue collection and corruption.

Specialists from the University's Graduate School of Government and the Law School have been working with government officials from a number of African countries involved in the mining sector.

In 2012 the University received short course funding from the Australian government through AusAID's Australia Awards, and attracted participants from Algeria, Liberia, Seychelles, Cote d'Ivoire, Sierra Leone, Togo, Malawi, South Sudan, Nigeria, and Ethiopia. In 2013, under the same program, Madagascar, Niger, Tanzania, Ghana, Zimbabwe, Gambia and South Africa will also be represented.

Geoff Gallop, Director of the Graduate School of Government and the former premier of Western Australia, said the course focused on best practice in all areas related to governance.

"What is the best way to regulate mining?" he asked. "What should governments put into their agreements with the mining companies to protect the public interest?"

He said Australia had been debating this issue for a long time. "For example one of the questions is whether we should insist on value-adding so you do more than just send off the gas, coal, or iron ore.

"In Australia we haven't been all that successful with it. In Western Australia a lot of the original agreements had pellet plants or pig iron plants, but they never happened or were abandoned. It was a lot easier to make the money out of simple extraction and export.

"So we're not saying that Australia is perfect at all, but we can use our experience to engage with the African officials and look for ways they can improve performance. Because we've been through it, we can talk about it."

Professor Gallop recently returned from Africa where he had follow-up meetings with officials who attended the course in Sydney last year.

He said there were already indications that the program was producing positive results, with successful legal challenges to the transfer prices used by mining companies in related party transactions. Transfer pricing is one of the main techniques that multinationals use to shift profits out of countries with little or no tax.

Professor Gallop said it was also in the interests of the miners - including more than 200 Australian mining companies active in Africa - to see the spread of good practice. "The miners want to know that the officials they are dealing with are professional and working to world's best practice," he said.